Question

If income levels of consumers within a given economy increase, what would happen to the demand curve for cell phones, a normal good, and the demand curve for instant noodles, an inferior good?
A. The demand curve for cell phones would shift to the right, and the demand curve for instant noodles would shift to the left
B. The demand curve for cell phones would shift to the left, and the demand curve for instant noodles would remain unchanged
C. The demand curve for cell phones would shift to the left, and the demand curve for instant noodles would shift to the right
D. The demand curves would both shift to the right

Answer 1

A. The demand curve for cell phones would shift to the right, and the demand curve for instant noodles would shift to the left.

Explanation: A rise in income increases demand for normal goods (cell phones) — shift right — and decreases demand for inferior goods (instant noodles) — shift left.